The Arkansas Scholarship Lottery's revenue dipped in fiscal 2014 by $29.5 million from fiscal 2013 to $410.6 million as the amount raised for college scholarships slipped by $8.9 million to $81.4 million.
It's the second consecutive year that the lottery's revenue and net proceeds for college scholarships have dropped. The lottery projects that net proceeds will drop again in fiscal 2015, which began July 1.
State Sen. Robert Thompson, D-Paragould, who is co-chairman of the lottery oversight committee, said Tuesday night that the lottery's final figures for fiscal 2014 "were not great, but that was expected."
The lottery, which started selling tickets on Sept. 28, 2009, saw its revenue peak in fiscal 2012.
It has helped finance Arkansas Academic Challenge Scholarships for more than 30,000 students in each of the past four school years.
The Legislature has cut the size of the scholarships for future recipients two times, partly because the lottery wasn't generating enough money to provide them.
Director Bishop Woosley initially estimated $459 million in ticket sales and $89.5 million for scholarships, but cut his projections to $417 million and $82.7 million, respectively, earlier this year. Late last month, he estimated that the lottery's net proceeds would be about $80.5 million in fiscal 2014.
On Tuesday, Woosley attributed the dip in lottery revenue in fiscal 2014 to a $32.6 million drop in sales of scratch-off tickets and a $12.3 million decline in Powerball ticket sales.
The lottery's scratch-off ticket sales fell from $335 million in fiscal 2013 to $322.4 million, while ticket sales for draw games, such as Powerball, Mega Millions, Cash 3, Cash 4 and the Natural State Jackpot, increased slightly from $84.4 million to $87.6 million, according to the lottery's reports to the lottery oversight committee.
The lottery's other revenue includes retailer application and fidelity bond fees of about $550,000 a year, the reports show.
Woosley, who has been the lottery's director since the lottery commission promoted him in February 2012 from chief legal counsel, pointed to the drop in scratch-off ticket sales and Powerball ticket sales in fiscal 2014 to explain why the lottery's net proceeds declined by $8.9 million.
For example, the lottery makes roughly 47 cents on every dollar from Powerball ticket sales, so the loss to net proceeds derived from the Powerball jackpot game is about $5.85 million, he said.
In April, the Arkansas Lottery Commission authorized the lottery staff to proceed with the implementation of electronic monitor games, a day after a majority of the Legislature's lottery oversight committee voted to oppose them.
But the Republican-controlled Legislature and Democratic Gov. Mike Beebe enacted a bill in a special session earlier this month to bar the lottery from offering electronic monitor games until March 13. The temporary moratorium on the monitor games will allow lawmakers to decide the future of the games in the 2015 regular legislative session, which begins in January.
Opponents of the monitor games include Oaklawn Park in Hot Springs, which persuaded lawmakers and Beebe last year to enact legislation to clear the way of Oaklawn Park to have its own online betting site.
The lottery's fiscal 2015 budget projects ticket sales of $428 million with $81.2 million collected for college scholarships. But that includes about $12.5 million in ticket sales revenue and about $3.5 million in college scholarships generated by a quick-draw game, which lottery officials had planned to introduce on Sept. 29.
Supporters of the quick-draw game said the game is similar to Powerball and Mega Millions, except drawings would be held every four minutes and results would be shown on monitors similar to television screens set up in participating locations.
Proponents of the electronic monitor games said about 15 state lotteries offer such games across the nation, while opponents of the games said voters didn't envision the lottery offering these games when they approved in 2008 a constitutional amendment authorizing the Legislature to create a state lottery to raise money for college scholarships.
Woosley said Tuesday that lottery officials may have to lower their forecasts for revenue and net proceeds.
"Certainly the hold on monitor games will negatively affect our original projections," he said.
In fiscal 2012, the lottery's revenue peaked at $473.6 million, and its net proceeds peaked at $97.5 million, according to its report to lottery oversight committee.
In fiscal 2010, the lottery's revenue totaled $384.5 million and net proceeds were $82.7 million, the lottery reported. The lottery sold tickets for about nine months in fiscal 2010.
In fiscal 2011, the lottery's revenue totaled $465 million, including $390.1 million in scratch-off ticket sales and $73.9 million in draw game ticket sales, and net proceeds were $94.2 million, the lottery reported.
Thompson said it's pretty clear to him that there "isn't much legislative appetite and much public appetite for new types of lottery games."
During the next few months, lawmakers and the lottery commission "probably need to think about ways to improve the lottery's operations," he said.
"Are there other things that the lottery can do to increase revenue without [adding] new types of games?"
Rep. Mark Perry, D-Jacksonville, who is the other co-chairman of the Legislature's lottery oversight committee, could not be reached for comment Tuesday night. In June of 2013, Perry urged the lottery commission to consider adding monitor games to boost ticket sales and net proceeds for college scholarships.
During the past few months, the lottery commission has approved Woosley's recommendations to ask lawmakers to change state law during their 2015 session to allow the purchase of lottery tickets with debit cards. Commissioners have also voted to increase the lottery's $4.5 million annual advertising budget by $500,000 and to lift a ban that the commission imposed in 2009 against advertising on college campuses, including at college sporting events.
These measures are ultimately aimed at boosting the lottery's ticket sales and net proceeds for college scholarships, according to Woosley.
As for what steps the lottery is taking to reverse declining ticket sales and net proceeds in the past two fiscal years, Woosley said Tuesday that the slump in Powerball ticket sales is a national trend, and "we're working with our national partners to improve the game and boost sales.
"Here at home, we're rolling out a series of new games, including the Lucky for Life game [in late January], and Monopoly, a national premium game built around an incredibly popular trademark, [in October]," he said.
The lottery also needs to focus on its underperforming areas such as northwest and northeast Arkansas, he said. "Retailer recruitment has always been an area ripe for expansion," Woosley said. "By increasing retailer incentives and relaxing bonding restrictions on our retailers, we can open the door to more businesses that have previously been resistant to selling our products." The lottery reported 1,879 retailers as of June 30.
In addition, the lottery is preparing for "a rebranding and a marketing campaign coinciding with the fifth anniversary of our launch," Woosley said.
A section on 07/16/2014